Internal Investigations: A primer Bob Cooper May 30, 2007

2 When do they occur? OHS Regulatory action Employee misconduct Whistleblower complaints Media reports

3 What’s at stake? Health and safety of employees Risk of regulatory or criminal prosecution Civil liability Reputation

4 Example #1 Forestry company operating on private land Forestry operations being carried out by contractors and sub-contractors A faller is critically injured in an accident and dies on-site before he can receive medical attention Investigations are started by WCB, police and coroner’s office The incident has a high media profile Labour and industry groups use the incident to lobby for changes to the industry Coroner announces public inquest At issue for the company is the likelihood of regulatory sanctions, the risk of prosecution and significant reputational risk

5 Example #2 Through a whistleblower hotline established by a major company, an anonymous complaint is made that certain key employees have engaged in insider trading The employees named are members of senior management The whistleblower provides few specifics If true, the allegation has serious consequences for the company and individuals involved At issue is the integrity and reputation of the company and individuals involved and the possibility of regulatory or civil action

6 Example #3 A routine review raises a serious issue of misconduct by a long-time employee The issue raises questions about the employee’s trustworthiness and calls into question the employee’s future with the company

7 What do you do? Anticipate the event Prepare the initial response Assess the risks Choose a process

8 Anticipate the event Something bad will happen; it is only a matter of time Decide who will be the point person Decide who will respond to media Know who your outside sources are

9 Initial response – Workplace accident Secure accident site Notify WCB Inform employees of rights/obligations Advise counsel Understand the scope of the duty to cooperate Document and record

10 Initial response - Regulatory Investigation Protect privilege Determine the purpose Contact counsel Search warrants Requests for production

11 Initial Response – Employee Misconduct Establish clear policies for conduct Complaints procedure in place – whistleblower program? Understand privacy and confidentiality obligations

12 Assess the risks What are the legal consequences? Closure Fines Prosecution Civil actions Distinguish between risks to the company and to the individuals involved Is there an obligation to report or disclose? Is the reputation of the company at stake?

13 Choose a process The process must be gauged to the seriousness of the incident Decide early if outside counsel is needed Will the investigation remain internal or will the results be made known to outside bodies?

14 What to watch out for Know your client Manage internal and external communications Maintain privilege Understand the regulatory environment

15 Know your client Decide who will provide instructions Management Directors Committee Make an early decision to go outside or stay home To be credible, the investigation must be independent

16 Manage internal & external communications It is easy to lose control over the investigation Limit knowledge inside the company to those who need to know Limit speculation and rumours by communicating what you can Have one external spokesperson

17 Understand the regulatory environment Know the regulator Understand what matters to them What are the current hot buttons? Beware of overlapping jurisdictions Kiss and make up or pistols at dawn

18 General considerations Investigations are hard on people The manner in which the investigation is carried out has the potential to cause more harm than the conduct under investigation Serious incidents get the attention of senior management There is increasing pressure from regulators to “cooperate” by disclosing the contents of the investigation Done properly, they can allow a company to get ahead of the curve